[Federal Register Volume 80, Number 250 (Wednesday, December 30, 2015)]
[Notices]
[Pages 81562-81564]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-32820]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-76760; File No. SR-NASDAQ-2015-154]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Relating to Participant Fee
December 23, 2015.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 17, 2015, The NASDAQ Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes [sic] amend the Exchange's transaction fees
at Chapter XV, entitled ``Options Pricing,'' Section 10, entitled
``Participant Fee--Options.''
The Exchange purposes [sic] an increase to its Participant Fee to
recoup costs incurred by the Exchange. The Exchange's Participant Fee
is competitive with those of other options exchanges.\3\ While the
amendment proposed herein is effective upon filing, the Exchange has
designated the amendment [sic] become operative on January 4, 2016.
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\3\ See note 14 below.
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The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaq.cchwallstreet.com, at the principal office of
the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to increase the NOM Participant Fee, so the
Exchange can allocate its costs to various options market participants.
Today, the Exchange assesses all NOM Participants a $500 per month
Participant Fee. This fee was initially assessed in 2012.\4\ The
Exchange proposes to increase this Participant Fee from $500 to $1,000
per month for all NOM Participants. The proposed Participant Fee is in
addition to the trading rights fee of $1,000 per month to be an
Exchange member.\5\
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\4\ See Securities and Exchange Act Release No. 68502 (December
20, 2012), 77 FR 76572 (December 28, 2012) (SR-NASDAQ-2012-139).
\5\ See Exchange Rule 7001.
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The Exchange believes this Participant Fee is competitive with fees
at other options exchanges.\6\
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\6\ See note 14 below.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \7\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act \8\ in particular, in that it provides
for the equitable allocation of reasonable dues, fees and other charges
among members and issuers and other persons using any facility or
system which the Exchange operates or controls, and is not designed to
permit unfair discrimination between customers, issuers, brokers, or
dealers.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(4) and (5).
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The Commission and the courts have repeatedly expressed their
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. In Regulation
NMS, for example, the Commission indicated that
[[Page 81563]]
market forces should generally determine the price of non-core market
data because national market system regulation ``has been remarkably
successful in promoting market competition in its broader forms that
are most important to investors and listed companies.'' \9\ Likewise,
in NetCoalition v. NYSE Arca, Inc.\10\ (``NetCoalition'') the D.C.
Circuit upheld the Commission's use of a market-based approach in
evaluating the fairness of market data fees against a challenge
claiming that Congress mandated a cost-based approach.\11\ As the court
emphasized, the Commission ``intended in Regulation NMS that `market
forces, rather than regulatory requirements' play a role in determining
the market data . . . to be made available to investors and at what
cost.'' \12\
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\9\ Securities Exchange Act Release No. 51808 at 37499 (June 9,
2005) (``Regulation NMS Adopting Release'').
\10\ NetCoalition v. NYSE Arca, Inc., 615 F.3d 525 (D.C. Cir.
2010).
\11\ See NetCoalition, at 534.
\12\ Id. at 537.
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Further, ``[n]o one disputes that competition for order flow is
`fierce.' . . . As the SEC explained, `[i]n the U.S. national market
system, buyers and sellers of securities, and the broker-dealers that
act as their order-routing agents, have a wide range of choices of
where to route orders for execution'; [and] `no exchange can afford to
take its market share percentages for granted' because `no exchange
possesses a monopoly, regulatory or otherwise, in the execution of
order flow from broker dealers'. . . .'' \13\ Although the court and
the SEC were discussing the cash equities markets, the Exchange
believes that these views apply with equal force to the options
markets.
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\13\ Id. at 539 (quoting ArcaBook Order, 73 FR at 74782-74783).
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The Exchange's proposal to increase the NOM Participant Fee from
$500 to $1,000 per month is reasonable because the Exchange is seeking
to recoup costs related to membership administration. The proposed fee
is competitive with fees at other options exchanges.\14\
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\14\ See The Chicago Board Options Exchange, Incorporated's Fees
Schedule. Per month a Market Maker Trading Permit is $5,500, an SPX
Tier Appointment is $3,000, a VIX Tier Appointment is $2,000, and an
Electronic Access Permit is $1,600. See also the International
Securities Exchange LLC's Schedule of Fees. Per month an Electronic
Access Member is assessed $500.00 for membership and a market maker
is assessed from $2,000 to $4,000 per membership depending on the
type of market maker. See also C2 Options Exchange, Incorporated's
Fees Schedule. Per month, a market-maker is assessed a $5,000 permit
fee, an Electronic Access Permit is assessed a $1,000 permit fee.
See also NYSE Arca, Inc.'s Fee Schedule. Per month, a Clearing Firm
is assessed a $1,000 per month fee for the first Options Trading
Permit (``OTP'') and $250 thereafter, and a market maker is assessed
a permit based on the maximum number of OTPs held by an OTP Firm or
OTP Holder during a calendar month ranging from $1,000 to $6,000 a
month.
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The Exchange's proposal to increase the NOM Participant Fee from
$500 to $1,000 per month is equitable and not unfairly discriminatory
because the Participant Fee will be assessed uniformly to each NOM
Participant.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. In terms of inter-market
competition, the Exchange notes that it operates in a highly
competitive market in which market participants can readily favor
competing venues if they deem fee levels at a particular venue to be
excessive, or rebate opportunities available at other venues to be more
favorable. In such an environment, the Exchange must continually adjust
its fees to remain competitive with other exchanges and with
alternative trading systems that have been exempted from compliance
with the statutory standards applicable to exchanges. Because
competitors are free to modify their own fees in response and because
market participants may readily adjust their order routing practices,
the Exchange believes that the degree to which fee changes in this
market may impose any burden on competition is extremely limited.
In terms of intra-market competition, the Exchange's proposal to
increase the NOM Participant Fee from $500 to $1,000 per month does not
impose an undue burden on competition because the Exchange would
uniformly assess the same Participant Fee to each NOM Participant. If
the proposed amendment is unattractive to market participants, it is
likely that the Exchange will lose Participants. Accordingly, the
Exchange does not believe that the proposed changes will impair the
ability of members or competing order execution venues to maintain
their competitive standing in the financial markets.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act.\15\
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\15\ 15 U.S.C. 78s(b)(3)(A)(ii).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NASDAQ-2015-154 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2015-154. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
[[Page 81564]]
Washington, DC 20549 on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-NASDAQ-2015-154, and should
be submitted on or before January 20, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-32820 Filed 12-29-15; 8:45 am]
BILLING CODE 8011-01-P